FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the period ended September 30, 1997
Commission File Number: 0-5893
American Bancorporation
(Exact name of registrant as specified in its charter)
Ohio 31-0724349
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1025 Main Street, Suite 800, Wheeling, WV 26003
(Address of principal executive offices) (Zip Code)
(304) 233-5006
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
October 24, 1997: 3,129,674 shares of Common stock without par value
Number of pages comprising
this report. . . . . . . 12
TABLE OF CONTENTS
Part I FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Balance Sheet. . . . . . . . . . 3
Condensed Consolidated Statement of Operations. . . . . 4
Condensed Consolidated Statement of Cash Flows. . . . . 5
Condensed Consolidated Statement of
Changes in Stockholders' Equity . . . . . . . . . . . . 6
Notes to the Financial Statements . . . . . . . . . . . . 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 7
Part II OTHER INFORMATION
Item 1 Legal Proceedings . . . . . . . . . . . . . . . . . . . . None
Item 2 Changes in Securities . . . . . . . . . . . . . . . . . . None
Item 3 Defaults Upon Senior Securities . . . . . . . . . . . . . None
Item 4 Submission of Matters to a Vote of Security Holders . . . None
Item 5 Other Information . . . . . . . . . . . . . . . . . . . . None
Item 6 Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
American Bancorporation and Subsidiaries
CONSOLIDATED BALANCE SHEET
September 30, December 31,
1997 1996 1996
ASSETS
Cash and due from banks. . . . . .$ 11,105,723 $ 12,118,420 $ 11,550,133
Federal funds sold . . . . . . . . 5,620,155 5,791,120 17,870,000
Investment securities
available for sale . . . . . . . 153,456,761 130,440,071 143,473,608
Loans, net of unearned income. . . 288,340,212 258,157,544 271,449,833
Less allowance for loan losses . 3,392,785 3,622,241 3,563,774
284,947,427 254,535,303 267,886,059
Premises and equipment - net . . . 10,184,488 9,470,704 9,730,880
Accrued interest receivable. . . . 3,633,538 3,604,428 2,985,322
Excess of cost over net
assets purchased . . . . . . . . 2,052,809 2,388,285 2,304,416
Other assets . . . . . . . . . . . 3,903,526 6,055,488 5,832,008
TOTAL ASSETS. . . . . . . . .$474,904,427 $424,403,819 $461,632,426
LIABILITIES
Deposits
Non-interest bearing. . . . . .$ 34,145,567 $ 33,467,600 $ 36,744,316
Interest bearing. . . . . . . . 309,735,355 281,190,194 283,066,502
TOTAL DEPOSITS. . . . . . . 343,880,922 314,657,794 319,810,818
Short-term borrowings . . . . . . 90,092,198 74,218,301 104,096,043
Accrued interest payable. . . . . 1,952,138 1,439,634 1,488,999
Other liabilities . . . . . . . . 5,222,991 4,188,965 4,876,191
Long-term debt. . . . . . . . . . 927,816 1,039,364 937,681
TOTAL LIABILITIES. . . . . . . 442,076,065 395,544,058 431,209,732
STOCKHOLDERS' EQUITY
Preferred stock. . . . . . . . . - - -
Common stock without par value,
stated value $5, authorized
6,500,000 shares, issued and
outstanding 1,564,837. . . . . . 7,824,185 7,824,185 7,824,185
Additional paid-in capital . . . 10,301,982 10,301,982 10,301,982
Retained earnings. . . . . . . . 14,128,088 11,441,021 12,021,258
Unrealized gain (loss) on
securities available for sale . 574,107 (707,427) 275,269
TOTAL STOCKHOLDERS' EQUITY . . 32,828,362 28,859,761 30,422,694
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY . . . .$474,904,427 $424,403,819 $461,632,426
American Bancorporation and Subsidiaries
CONSOLIDATED STATEMENT OF OPERATIONS
Quarter Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
INTEREST INCOME
Loans . . . . . . . . . . $ 6,335,266 $ 5,709,335 $18,442,153 $16,614,538
Investment securities
Taxable interest income. 2,566,404 2,107,059 7,564,434 4,834,527
Non-taxable
interest income . . . . 21,624 32,188 68,978 100,212
2,588,028 2,139,247 7,633,412 4,934,739
Other short-term
investments . . . . . . 83,603 41,070 264,436 319,664
Total interest income . 9,006,897 7,889,6522 6,340,0012 1,868,941
INTEREST EXPENSE
Deposits. . . . . . . . . 3,401,212 2,760,788 9,522,400 8,095,234
Borrowed funds. . . . . . 1,245,475 933,629 3,856,644 1,873,140
Total interest expense. 4,646,687 3,694,417 13,379,044 9,968,374
NET INTEREST INCOME . 4,360,210 4,195,235 12,960,957 11,900,567
PROVISION FOR LOAN LOSSES. - - - -
Net interest income after
provision for loan losses 4,360,210 4,195,235 12,960,957 11,900,567
OTHER INCOME
Service charges on
deposit accounts . . . . 190,571 224,342 563,817 655,865
Securities gains (losses) (44) (3,794) 4,293 (3,794)
Insurance commissions . . 22,882 28,084 71,879 93,927
Other income. . . . . . . 556,785 434,132 1,422,025 1,074,979
Total other income. . . 770,194 682,764 2,062,014 1,820,977
OTHER EXPENSE
Salaries and
employee benefits. . . . 1,475,122 1,390,384 4,328,362 4,101,993
Occupancy and
equipment expense. . . . 598,028 553,244 1,795,405 1,665,981
Other expenses. . . . . . 1,241,124 1,449,987 3,717,165 3,692,882
Total other expense . . 3,314,274 3,393,615 9,840,932 9,460,856
INCOME BEFORE INCOME TAXES 1,816,130 1,484,384 5,182,039 4,260,688
PROVISION FOR INCOME TAXES 651,116 551,901 1,901,581 1,566,156
NET INCOME . . . . . . . . $ 1,165,014 $ 932,483 $ 3,280,458 $ 2,694,532
Average Shares Outstanding 1,564,837 1,564,837 1,564,837 1,564,837
NET INCOME PER SHARE . . . $ 0.74 $ 0.60 $ 2.10 $ 1.72
American Bancorporation and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine months ended September 30,
1997 1996
Operating Activities:
Net Income. . . . . . . . . . . . . . . . . . . . $ 3,280,458 $ 2,694,532
Charges to operations (using) not using
cash in the current period . . . . . . . . . . . 2,973,023 (885,416)
Net cash provided by operating activities . . . 6,253,481 1,809,116
Investing Activities:
Purchase of branch assets, net of cash acquired . - 14,171,001
Investment securities available for sale:
Proceeds from maturities and repayments . . . . 25,585,188 16,846,616
Proceeds from sales . . . . . . . . . . . . . . 46,746,234 4,053,743
Purchases . . . . . . . . . . . . . . . . . . . (82,031,056) (84,908,587)
Net increase in loans . . . . . . . . . . . . . . (17,061,368) (7,767,131)
Purchase of premises and equipment. . . . . . . . (1,069,500) (1,244,261)
Net cash used by investing activities . . . . . (27,830,502) (58,848,619)
Financing Activities:
Net increase (decrease) in non-interest
bearing demand deposits. . . . . . . . . . . . . (2,598,749) 698,028
Net decrease in interest bearing
demand and savings deposits. . . . . . . . . . . (9,291,309) (3,619,623)
Net increase in time deposits . . . . . . . . . . 35,960,162 9,764,952
Net increase (decrease) in short-term borrowings. (14,003,845) 46,695,635
Principal repayment of long-term debt . . . . . . (9,865) (7,761)
Cash dividends paid . . . . . . . . . . . . . . . (1,173,628) (938,906)
Net cash provided by financing activities . . . 8,882,766 52,592,325
Net Decrease in Cash and Cash Equivalents . . . . (12,694,255) (4,447,178)
Cash and Cash Equivalents Beginning Balance. . . . $29,420,133 $22,356,718
Cash and Cash Equivalents Ending Balance . . . . . $16,725,878 $17,909,540
American Bancorporation and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Nine months ended September 30, 1997 and 1996
1997 1996
Balance at January 1, . . . . . . . . . . . . . $30,422,694 $28,012,422
Net Income. . . . . . . . . . . . . . . . . . 3,280,458 2,694,532
Dividends declared ($.75 per share 1997,
$0.65 per share 1996). . . . . . . . . . . . (1,173,628) (1,017,144)
Unrealized gain (loss) on securities
available for sale . . . . . . . . . . . . . 298,838 (830,049)
Balance at September 30,. . . . . . . . . . . . $32,828,362 $28,859,761
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The unaudited interim condensed consolidated financial statements reflect all
adjustments which, in the opinion of management, are necessary to a fair
presentation of the financial position and results of operations. All
adjustments are of a normal recurring nature. The notes to the financial
statements contained in the 1996 Annual Report to Stockholders should be read
in conjunction with these statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL POSITION AND RESULTS OF OPERATIONS
SUMMARY
American Bancorporation (the "Company") recognized net income of $3,280,000
($2.10 per share) for the nine months ended September 30, 1997, compared to
net income of $2,695,000 ($1.72 per share) for the nine months ended September
30, 1996. The Company's assets totalled $474,904,000 at September 30, 1997,
compared to $424,404,000 at September 30, 1996.
The following is a discussion of significant factors influencing operating
performance and change in financial position during the interim periods
presented. The discussion should be read in connection with the 1996 Annual
Report to Stockholders and the financial statements appearing elsewhere
herein.
RESULTS OF OPERATIONS
NINE MONTH COMPARISON
Net Income. Net income for the nine months ended September 30, 1997 amounted
to $3,280,000, compared to $2,695,000 for the nine months ended September 30,
1996. The increase was the result of increases in net interest income and
other income which were partially offset by an increase in other expenses.
Net Interest Income. Net interest income before provision for loan losses for
the nine months ended September 30, 1997 amounted to $12,961,000, an increase
of $1,060,000 or 8.9%, as compared to the nine months ended September 30,
1996. The increase resulted primarily from a $71,016,000 or 19.5% increase in
average interest earning assets, which was partially offset by a 39 basis
point decrease in the Company's margin.
Interest Income. Total interest income for the nine months ended September
30, 1997 amounted to $26,340,000, an increase of $4,471,000 or 20.4%, as
compared to the same period in 1996. The increase resulted primarily from a
$71,016,000 increase in the average volume of earning assets and a 6 basis
point increase in the average yield on earning assets. Average loans
outstanding increased $29,759,000 or 11.9%. Average commercial loans increased
$20,891,000 or 29.7% and average real estate loans increased $14,126,000 or
11.2%, while average consumer installment loans decreased $5,258,000 or 9.9%.
The average yield on loans decreased from 8.87% in 1996 to 8.80% in 1997.
Average investment securities and other short-term investments outstanding
increased $41,257,000 or 36.1%, while the average yield increased from 6.12%
in 1996 to 6.76% in 1997.
Interest Expense. Total interest expense for the nine months ended September
30, 1997 amounted to $13,379,000, an increase of $3,411,000 or 34.2% as
compared to the nine months ended September 30, 1996. The increase resulted
primarily from a $68,011,000 or 20.9% increase in the average volume of
interest bearing liabilities and a 45 basis point increase in interest rates
paid on such liabilities. Average NOW, money market and savings accounts
decreased $4,832,000. Average time deposits increased $27,471,000. Average
noninterest bearing accounts increased $1,208,000 and represented 10.0% of
average total deposits in 1997. Average short-term borrowings increased
$45,483,000 or 96.2% and the average rate paid on short-term borrowings
increased from 5.10% in 1996 to 5.46% in 1997.
Provision for Loan Losses. There was no loan loss provision for the nine
months ended September 30, 1997 or 1996.
Other Income. Other income amounted to $2,062,000 for the nine months ended
September 30, 1997, an increase of $241,000 or 13.2%, as compared to the same
period in 1996.
Other Expense. Total other expense for the nine months ended September 30,
1997 amounted to $9,841,000, an increase of $380,000 or 4.0%, as compared to
the same period in 1996. Salaries and employee benefits increased $226,000
or 5.5%. Occupancy and equipment expense increased $130,000 or 7.8%. Other
(miscellaneous) expenses increased $24,000 or 0.7%. Other (miscellaneous)
expenses during the same period in 1996 included a one-time assessment of
$245,000 as a result of Federal legislation enacted to recapitalize the
Savings Association Insurance Fund.
Provision for Income Taxes. The provision for income taxes for the nine
months ended September 30, 1997 was $1,902,000, an increase of $335,000 or
21.4%, as compared to the same period in 1996. The increase was due to the
increase in the Company's pre-tax income.
RESULTS OF OPERATIONS
QUARTER COMPARISON
Net Income. Net income for the quarter ended September 30, 1997 amounted to
$1,165,000, compared to net income of $932,000 for the quarter ended September
30, 1996. The increase was the result of increases in net interest income and
other income and a decrease in other expenses.
Net Interest Income. Net interest income before provision for loan losses for
the quarter ended September 30, 1997 amounted to $4,360,000, an increase of
$165,000 or 3.9%, as compared to the quarter ended September 30, 1996. The
increase resulted primarily from a $52,532,000 or 13.5% increase in average
interest earning assets, which was partially offset by a 36 basis point
decrease in the Company's margin.
Interest Income. Total interest income for the quarter ended September 30,
1997 amounted to $9,007,000, an increase of $1,117,000 or 14.2%, as compared
to the same period in 1996. The increase resulted primarily from a
$52,532,000 or 13.5% increase in the average volume of earning assets and a 5
basis point increase in the average yield on earning assets. Average loans
outstanding increased $28,940,000 or 11.3%. Average commercial loans
increased $19,125,000 or 26.1%, and average real estate loans increased
$14,136,000 or 10.9%, while average installment loans decreased $4,321,000 or
8.3%. The average yield on loans decreased from 8.94% in 1996 to 8.91% in
1997. Average investment securities and other short-term investments
outstanding increased $23,592,000 or 17.7%, while the average yield increased
from 6.53% in 1996 to 6.80% in 1997.
Interest Expense. Total interest expense for the quarter ended September 30,
1997 amounted to $4,647,000, an increase of $952,000 or 25.8%, as compared to
the same period in 1996. The increase resulted primarily from a $46,102,000
or 13.2% increase in the average volume of interest bearing liabilities
and a 47 basis point increase in interest rates paid on such liabilities.
Provision for Loan Losses. There was no loan loss provision for the quarter
ended September 30, 1997 or 1996.
Other Income. Other income amounted to $770,000 for the quarter ended
September 30, 1997, compared to $683,000 for the same period in 1996.
Other Expense. Total other expense for the quarter ended September 30, 1997
amounted to $3,314,000, a decrease of $79,000 or 2.3%, as compared to the same
period in 1996. Salaries and employee benefits increased $85,000 or 6.1%.
Occupancy and equipment expense increased $45,000 or 8.1%. Other
(miscellaneous) expenses decreased $209,000 or 14.4%. As the result of
Federal legislation enacted to recapitalize the Savings Association Insurance
Fund, the Company took a $245,000 charge against earnings during the third
quarter of 1996. The one-time assessment applied to thrift deposits acquired
by the Company in recent years.
Provision for Income Taxes. The provision for income taxes for the quarter
ended September 30, 1997 was $651,000, compared to $552,000 for the same
period in 1996. The increase was due to the increase in the Company's pre-tax
income.
ASSET QUALITY
Nonperforming loans totalled $2,693,000 or 0.9% of total loans at September
30, 1997, compared to $1,963,000 or 0.7% at December 31, 1996. Nonperforming
loans at September 30, 1997 consisted of nonaccrual loans totalling $815,000,
90 day delinquent loans of $1,265,000, and restructured loans aggregating
$613,000. Other real estate held totalled $358,000 at September 30, 1997,
compared to $607,000 at December 31, 1996.
CAPITAL RESOURCES
Stockholders' equity totalled $32,828,000 at September 30, 1997. The Company's
risk-based capital ratio was 12.2%, of which 11.0% constituted common
stockholder equity, while the risk-based capital ratio for the Company's bank
subsidiary, Wheeling National Bank, was 12.5%, with common stockholders'
equity of 11.2%. At September 30, 1997 the Company's leverage capital ratio
was 6.5%, while the leverage ratio for Wheeling National Bank was 6.7%.
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
1997 1996 1997 1996
Average Yield/ Average Yield/ Average Yield/ Average Yield/
Balance Rate Balance Rate Balance Rate Balance Rate
INTEREST EARNING ASSETS (000's) (000's) (000's) (000's)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loans
Commercial . . . . . . $ 92,378 9.61% $ 73,253 9.08% $ 91,130 9.29% $ 70,239 9.20%
Real estate. . . . . . 143,992 8.14 129,856 8.35 140,351 8.07 126,225 8.28
Installment-net. . . . 47,986 8.81 52,307 8.94 47,996 8.83 53,254 8.97
Total loans . . . . . 284,356 8.91 255,416 8.94 279,477 8.80 249,718 8.87
Investment securities
Taxable. . . . . . . . 153,301 6.70 129,000 6.53 151,423 6.66 107,298 6.01
Tax-exempt . . . . . . 1,028 8.41 1,882 6.84 1,109 8.30 2,011 6.64
Total investment
securities . . . . . 154,329 6.71 130,882 6.54 152,532 6.67 109,309 6.02
Other short-term
investments . . . . . 2,777 12.04 2,632 6.24 3,146 11.21 5,112 8.34
Total interest
earning assets. . . $441,462 8.16 $388,930 8.11 $435,155 8.07 $364,139 8.01
INTEREST BEARING LIABILITIES
Deposits
NOW, Savings
and MMDA . . . . . . $122,804 2.73% $129,811 2.66% $124,854 2.67% $129,686 2.63%
Time. . . . . . . . . 185,189 5.54 149,688 5.07 174,228 5.38 146,757 5.03
Total deposits . . . 307,993 4.42 279,499 3.95 299,082 4.25 276,443 3.90
Short-term borrowings. 87,058 5.63 69,338 5.25 92,771 5.46 47,288 5.10
Long-term debt . . . . 928 8.58 1,040 8.88 932 8.44 1,043 8.42
Total interest
bearing liabilities $395,979 4.69 $349,877 4.22 $392,785 4.54 $324,774 4.09
MARGIN ANALYSIS
(as a % of earning assets)
Interest income . . . . . 8.16% 8.11% 8.07% 8.01%
Interest expense. . . . . 4.21 3.80 4.10 3.65
Net interest income . . . 3.95% 4.31% 3.97% 4.36%
<FN>
Averages stated are month end average balances. Installment loans are stated
net of unearned income.
Average loans include nonaccrual loans. Yields do not reflect tax equivalent
adjustments.
</FN>
</TABLE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
B. Reports on Form 8-K:
Date Item Description
September 23, 1997 5. Other Events - 2 for 1 Stock Split
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN BANCORPORATION
(Registrant)
Date: November 12, 1997 /s/ Jeremy C. McCamic
Jeremy C. McCamic
Chairman and Chief Executive Officer
Date: November 12, 1997 /s/ Brent E. Richmond
Brent E. Richmond
Chief Financial and
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-TYPE> 9-MOS
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 11,105,723
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,620,155
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 153,456,761
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 153,456,761
<LOANS> 288,340,212
<ALLOWANCE> 3,392,785
<TOTAL-ASSETS> 474,904,427
<DEPOSITS> 343,880,922
<SHORT-TERM> 90,092,198
<LIABILITIES-OTHER> 7,175,129
<LONG-TERM> 927,816
<COMMON> 7,824,185
0
0
<OTHER-SE> 25,004,177
<TOTAL-LIABILITIES-AND-EQUITY> 474,904,427
<INTEREST-LOAN> 18,442,153
<INTEREST-INVEST> 7,633,412
<INTEREST-OTHER> 264,436
<INTEREST-TOTAL> 26,340,001
<INTEREST-DEPOSIT> 9,522,400
<INTEREST-EXPENSE> 13,379,044
<INTEREST-INCOME-NET> 12,960,957
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 4,293
<EXPENSE-OTHER> 9,840,932
<INCOME-PRETAX> 5,182,039
<INCOME-PRE-EXTRAORDINARY> 3,280,458
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,280,458
<EPS-PRIMARY> 2.10
<EPS-DILUTED> 2.10
<YIELD-ACTUAL> 3.97
<LOANS-NON> 815,000
<LOANS-PAST> 1,265,000
<LOANS-TROUBLED> 613,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
